Peugeot Closes In on Capital Boost

Shares Slide Amid Talks on Capital Increase

By

David Pearson And

Noémie Bisserbe

Updated Jan. 20, 2014 4:16 p.m. ET

PARIS—PSA Peugeot Citroën is moving closer to a €3 billion ($4.06 billion) transformative deal with a Chinese partner and the French government that will hinge on whether private investors have appetite for shares in an unprofitable and cash-bleeding car maker exposed to cutthroat competition in Europe.

Peugeot said Monday that it was pursuing talks with China's Dongfeng Motor Co. and the French government over a capital boost aimed at recapitalizing Europe's second-largest car maker by volume. It said all shareholders...